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MCIS 2018 Proceedings
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2018

Digital Transformation: Drivers, Success Factors,

and Implications
Karen Osmundsen
Norwegian School of Economics, Norway, karen.osmundsen@nhh.no

Jon Iden
NHH - Norwegian School of Economics, jon.iden@nhh.no

Bendik Bygstad
University of Oslo, bendikby@ifi.uio.no

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Recommended Citation
Osmundsen, Karen; Iden, Jon; and Bygstad, Bendik, "Digital Transformation: Drivers, Success Factors, and Implications" (2018).
MCIS 2018 Proceedings. 37.
https://aisel.aisnet.org/mcis2018/37

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 DIGITAL TRANSFORMATION: DRIVERS, SUCCESS
FACTORS, AND IMPLICATIONS

Research full-length paper

General Track

Osmundsen, Karen, Norwegian School of Economics, Norway, karen.osmundsen@nhh.no

Iden, Jon, Norwegian School of Economics, Norway, jon.iden@nhh.no
Bygstad, Bendik, University of Oslo, Norway, bendikby@ifi.uio.no

Abstract
In this paper, we explore drivers, objectives, success factors, and implications of digital
transformation. This investigation is conducted through a systematic literature review that focuses on
empirical contributions in the Information Systems (IS) field. By reviewing prevailing empirical
contributions on digital transformation, we provide insight into why organizations undergo digital
transformation, how to accomplish such a transformation, and how digital transformation affects an
organization.
Keywords: Digital transformation, Literature review, Digitalization, Digital innovation.

1 Introduction
Pervasive and ubiquitous digitalization has brought new disruptive changes to the economy (Yoo,
2013), and environmental conditions are undergoing rapid change due to digital technology and
digitalization (Hartl and Hess, 2017; Porter and Heppelmann, 2014). Digital technology, digital
innovation, and digitalization are fundamentally altering business processes, products, services, and
relationships (Karimi and Walter, 2015), and organizations need to fundamentally change the way
they do business and employees’ mindset, as well as restructure to survive (Hartl and Hess, 2017;
Porter and Heppelmann, 2014). In other words, many organizations have undergone or are currently
undergoing a digital transformation.
The concept digital transformation currently lacks a clear definition (Haffke, Kalgovas, and Benlian,
2016, 2017). However, researchers typically characterize digital transformation as a major
organizational change driven by, built on, or enabled by digital technology, altering how business is
conducted (Bilgeri, Wortmann, & Fleisch, 2017; Haffke et al., 2016, 2017; Hartl & Hess, 2017;
Heilig, Schwarze, & Voß, 2017; Mueller & Renken, 2017). The concept digital transformation is often
used interchangeably with concepts such as digitalization and digital innovation. However, although
some similarities exist, it is important to distinguish the three to obtain a more informed dialogue
based on a consistent use of terminology.
Digitalization is about leveraging digital technology to alter socio-technical structures. By structures,
we refer to anything composed of parts arranged together, such as a product, service, user experience,
process, etc. By socio-technical structures, we refer to the social (human interactions, relationships,
norms, etc.) and technical (technology, tasks, routines, etc.) aspects of the structure. The material and
social aspects of the constructs change in the digitalization process. Thus, digitalization goes beyond a
mere technical process of encoding analog information in a digital format (i.e., digitization; Yoo,
Lyytinen, et al., 2010).

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Many researchers refer to Yoo, Henfridsson, and Lyytinen (2010) and Fichman Dos Santos, and
Zheng (2014) when discussing digital innovation. They have somewhat different approaches to
defining digital innovation, but what is common is that it is something novel or perceived as new, and
that it relies on digital technology. Yoo and colleagues (2010) further define digital innovation as a
process (i.e., to innovate) whereas Fichman and colleagues (2014) focus on the outcome of a digital
innovation. We draw on both approaches to digital innovation and suggest that digital innovation is a
process and an outcome, and is about combining digital technology in new ways or with physical
components that enables socio-technical changes and creates new value for adopters.
Digitalization, digital innovation, and digital transformation are closely related and are linked to one
another in different ways. Figure 1 illustrates a conceptual model of how we understand these concepts
are connected.

Figure 1. Conceptual model of digital transformation and related concepts.

First, these concepts build on digital technology. Second, the outcome of a digital innovation can lead
to digitalization through individuals’ absorption in the diffusion stage of the digital innovation process
(Fichman et al., 2014). Third, we suggest that digitalization and digital innovation can enable major
changes in how business is conducted, leading to digital transformation of organizations or entire
industries.
Based on the characteristics of digital transformation and links from digitalization and digital
innovation, we suggest defining digital transformation as when digitalization or digital innovation over
time is applied to enable major changes to how business is conducted, leading to a significant
transformation of an organization or an entire industry.
In this paper, we investigate digital transformation in the organizational context, based on a literature
review of empirical contributions on the topic. Some literature reviews have been conducted on this
topic (Henriette, Feki, and Boughzala, 2015; Morakanyane, Grace, and Reilly, 2017). However, in this
review we explore empirical contributions to answer three research questions:

 RQ1: Why do organizations undergo digital transformation?

 RQ2: How can an organization accomplish a digital transformation?
 RQ3: How does a digital transformation affect an organization?

By answering these questions, we provide insight into what has empirically been identified in the
literature as drivers and objectives, success factors, and implications of digital transformation in
organizations. Thus, this literature review supplements previous reviews of digital transformation. In
section 2, we briefly describe how the literature review was conducted. In section 3, we present some
of the findings from the review, and in section 4, we discuss the findings and conclude the paper.

2 Method
This paper is based on an extension of a systematic literature review of digitalization, which initially
investigated how digitalization is conceptualized in prevailing research. The first step in the review

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was a keyword search to identify publications on digitalization. The reproducibility of the results was
ensured by adapting a structured and well-established approach (Webster and Watson, 2002). To find
relevant articles that did not use the terminology directly, we included keywords related to
“digitalization” in the search: digital transformation, digital movement, digital master, digital
initiative, digital disruption, digital innovation, digital strategy, digital business strategy, digital vision,
and chief digital officer (CDO). We chose keywords based on concepts that frequently appeared in
media and reports, and on an analysis of the terminology used in Westerman, Bonnet, and McAfee’s
(2014) highly acknowledged book Leading Digital and the frequently cited Bharadwaj et al. (2013)
article, “Digital Business Strategy: Towards a Next Generation of Insights.”
The aim of the search was to identify research articles of validated quality. As major contributions are
most likely found in leading journals with a high reputation for quality (Webster and Watson, 2002),
we searched for information management-related articles in journals with a score of 3 or 4 in the
Academic Journal Quality Guide 20151. There were 21 journals within information management with
this rating at the time of the search. The search for articles in these journals was conducted in
SCOPUS2. Taking into account the long review cycles of journals and the availability of high-quality
conferences in the Information Systems (IS) field, we also conducted searches in four reputable
conference proceedings: the International Conference on Information Systems (ICIS), the Americas
Conference on Information Systems (AMCIS), the European Conference on Information Systems
(ECIS), and the Hawaii International Conference on Systems Sciences (HICSS), via the AIS electronic
library (AISeL)3. In total, we searched in 21 journals and four international conferences. The search
targeted articles discussing digitalization and similar concepts, published between January 1, 2010,
and December 6, 2017. Only articles written in English were included. Regarding articles from the
four conferences, only conference papers were included (and not series). The compound search strings
resulted in 54 journal articles and 128 conference papers.
The papers obtained from the keyword search were screened for whether they actually discussed or
conceptualized digitalization or related phenomena. Given the broad search strings, we excluded a
considerable number of papers that did not meet these criteria. Papers were excluded if they were not
relevant according to the search words or research focus.
The initial screening resulted in 69 papers, 26 from journals and 43 from conferences. To answer the
research questions, we analyzed the empirical contributions from the papers that examined digital
transformation. This led to the identification of 21 relevant empirical articles: two journal articles and
19 conference papers. We chose only empirical contributions at this point to better capture actual
findings from organizations undergoing digital transformation. The articles are specified in appendix
A.

3 Findings
We focused on empirical contributions, and excluded theoretical and conceptual contributions. We
analyzed the 21 contributions according the research questions, and grouped the papers into three
categories based on where the research could contribute valuable insights: Drivers and Objectives,
Success Factors, and Implications. Some papers touched upon more than one category. Table 1 shows
the categories and the articles that discuss each topic.

1 https://charteredabs.org/academic-journal-guide-2015-view/
2 https://www.scopus.com/search/form.uri?display=basic
3 http://aisel.aisnet.org/

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Research topic # Article ID

Drivers and objectives 8 2, 5, 9, 14, 15, 18, 19, 20
Success factors 15 1, 2, 4, 5, 7, 8, 9, 10, 11, 13, 16, 17, 18, 19, 21
Implications 14 3, 4, 5, 6, 7, 10, 11, 12, 14, 15, 16, 19, 20, 21
Table 1. Categorization of empirical research topics.
Drivers and objectives refer to the attributes and goals that initiate and influence digital transformation
(Morakanyane et al., 2017), as identified in the empirical studies in this review. Success factors refer
to essential organizational elements for accomplishing digital transformation. Implications refer to the
effects organizations experience as a result of digital transformation (Morakanyane et al., 2017). In the
following sub-sections, insights from prevailing research findings are presented to shed light on the
research questions. The findings are summarized in table 2.

Drivers and Objectives Source Article ID

Drivers
Customer behavior and expectations 8, 14, 18
Digital shifts in the industry 18
Changing competitive landscape 3, 5, 18
Regulative changes 18
Objectives
Ensure digital readiness 18
Digitally enhance products 20
Embrace product innovation 18
Develop new business models 18, 20
Improve digital channels 15, 18, 19, 20
Increase customer satisfaction and dialogue 15, 18, 19, 20
Success factors Source Article ID
A supportive organizational culture 9, 14
Well-managed transformation activities 18
Leverage external and internal knowledge 5, 11, 17, 19
Engage managers and employees 4, 5, 10, 13, 21
Grow IS capabilities 7
Develop dynamic capabilities 1, 16, 18
Develop a digital business strategy 2, 7, 8, 16
Align business and IS 2, 7, 8, 16
Implications Source Article ID
Reformed IS organization 3, 5, 6, 14, 15, 19
New business models 11, 12, 20
Effects on outcome and performance 7
Table 2. Summary of findings.

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3.1 Drivers and objectives: why do organizations undergo digital

transformation?
The increased use and the generative character of digital technology have altered the way business is
conducted and how organizations compete and interact, and have led to changes in customer and end-
user behaviors and expectations. Organizations’ environments are becoming increasingly unstable, and
to leverage the opportunities of digital technologies, an organizational transformation is necessary
(Hartl and Hess, 2017). Many organizations realize the need to transform their organization in order to
stay relevant and competitive, and to keep up with the digital development in their industry. Berghaus
and Back (2017) examined the motivations behind different organizations’ digital transformation
programs, and found many of the same drivers and objectives despite differences in industry and
company size.
Drivers
Drivers can be seen as external or internal triggers for why organizations engage in digital
transformation. Organizations report a need to keep up with digital shifts occurring in the industry in
which they operate. Digital transformation is found to often be triggered by changing customer
behaviors and expectations (Haffke et al., 2017; Schmidt, Drews, and Schirmer, 2017), digital shifts in
the organization’s industry, and changes in the competitive landscape (Berghaus and Back, 2017).
Organizations face new competitive challenges and compete with an expanding range of rivals and
non-industry entrants (Berghaus and Back, 2017; Piccinini, Hanelt, Gregory, and Kolbe, 2015).
Moreover, organizations experience digitalization pressure through competitors’ demonstration of
digital advances, new market entrants with disruptive digital business models, and technological
progress in general, which, in turn, drives companies to engage in organizational transformation
(Haffke et al., 2016). Further, if the pressure becomes intense and accumulates rapidly, it may result in
the need for an organization to express its digital ambitions by establishing a CDO role to drive digital
transformation (Haffke et al., 2016). Berghaus and Back (2017) also found that some organizations
faced regulatory changes, which forced the firms to re-think the way they do business and transform
their organization.
Objectives
Berghaus and Back (2017) found that one of the main objectives of a digital transformation is related
to organizations wanting to ensure digital readiness, meaning that they want to make sure they are
alert to changing contexts to be able to react quickly when necessary. The aims to digitally enhance
existing products (Mocker and Fonstad, 2017), to engage in product innovation (Berghaus and Back,
2017), and to explore and develop new, potentially disruptive, business models in order to stay
competitive and generate new revenue (Berghaus and Back, 2017; Mocker and Fonstad, 2017) were
also found to be objectives motivating digital transformation. Other common objectives are found to
improve digital channels and customer-facing processes, and deliver up-to-date digital products, in
order keep up with the changing customer behaviors and expectations, and improve and maintain
customer satisfaction and dialogue (Berghaus and Back, 2017; Bilgeri et al., 2017; Isaksson and
Hylving, 2017; Mocker and Fonstad, 2017).

3.2 Success factors: what is necessary to accomplish digital

transformation?

Supportive and agile organizational culture

Embracing digital transformation is not straightforward, and there is much to consider before and
during digital transformation. One aspect is the organizational culture, which can have an effect on the
process and outcome of a digital transformation (Mueller and Renken, 2017). For a successful digital
transformation, the organization as a whole must adopt a supportive culture in which joint business
and IT initiatives can flourish (Haffke et al., 2017). Hartl and Hess (2017) conducted a Delphi study to

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examine what cultural values are considered supportive of digital transformation and crucial for digital
transformation success. The most prominent organizational values identified were openness to change
(i.e., openness to new ideas and readiness to embrace change) and customer centricity (i.e., designing
activities to meet customer needs). An organization that values openness to change fosters a
willingness to accept, implement, promote, and establish a change-oriented mindset, which is essential
for mastering digital transformation (Hartl and Hess, 2017). Organizational values such as
innovativeness, willingness to learn, tolerance of failure, risk affinity, and entrepreneurial mindset
were emphasized, as well as trust, participation, cooperation, and communication (Hartl and Hess,
2017). These findings propose an organizational culture emphasizing agility (rather than control) in
order to support digital transformation, including internally and externally driven values.
Well-managed transformation activities
Agility may be essential for any organization embracing digital transformation; however, empirical
evidence shows there is no “one size fits all” approach to digital transformation and that the situational
context of the organization often determines the appropriate approach (Berghaus and Back, 2017).
Berghaus and Back (2017) identified transformation activities that organizations typically engage in
before, or during, digital transformation. One activity that appeared to be important in several case
studies was improving the organization’s digital channels, that is, setting up, operating, and improving
the channels (Berghaus and Back, 2017), moving toward a multi-/omni-channel strategy for reaching
end users. The authors also pointed out the importance of managing the initiation and set-up of
simplified processes and updated infrastructures. Further, organizations were found to also engage in
innovation activities and develop a digital strategy (Berghaus and Back, 2017). Such activities were
often carried out by designated teams, and in collaboration with external parties. Although not all
activities the authors identified are relevant for every organization’s digital transformation, different
organizations create a path to digital transformation through different variants and combinations of
these activities (Berghaus and Back, 2017).
Leverage knowledge
Some researchers have found evidence for the importance of leveraging internal and external
knowledge in a digital transformation. By studying organizations engaging in mergers and acquisitions
(M&A) of digital technology–related companies, Hildebrandt, Hanelt, Firk, and Kolbe (2015) found
that through acquiring, integrating, and commercializing complementary and heterogeneous
knowledge of digital technology, these organizations became better prepared for mastering the digital
transformation of their business (Hildebrandt et al., 2015). Other studies emphasized the importance of
leveraging customer- and end-user knowledge to deliver customized, up-to-date digital products and
services (Piccinini et al., 2015), and collaborating with start-ups to develop more agile project
methodologies and implement start-up mentalities to reduce resistance to innovation (Bilgeri et al.,
2017; Piccinini et al., 2015). Particularly in the automotive industry, building partnerships, reducing
gaps, and improving information exchange among different players and business units were found to
be key issues for designing new business models, creating new digital value, and enabling a seamless
customer experience (Piccinini et al., 2015). These issues were also highlighted by Bilgeri et al.
(2017), who found that business unit collaboration and external partnerships are essential for large
manufacturing companies undergoing digital transformation. However, many large manufacturing
firms struggle to incentivize their business units to collaborate because of internal pricing conflicts and
lack the capability to identify and establish potential partnerships in the digital context (Bilgeri et al.,
2017).
Further, internal knowledge is also found to be essential in digital transformation. In particular,
internally focused digital transformation depends not only on identifying and implementing
innovative digital technologies but also on helping employees leverage these technologies to be more
innovative in their work and become digital transformers themselves (Mueller and Renken, 2017). To
ensure that digital technologies are leveraged in people’s work and contribute to digital
transformation, Mueller and Renken (2017) identified four “lessons learned.” Their first

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recommendation was that organizations establish a hybrid project structure, which emphasizes roles
from IS functions and non-IS functions to ensure that the technology actually reaches employees.
Second, the authors emphasized the importance of building collectives for transformation success, for
providing specific and localized input for requirements and for customizing communication. Third,
they emphasized the importance of communication to employees, in a way that employees easily
understand what the technology can do and how they can leverage it. The fourth recommendation
highlighted the need for an organizational culture that supports transformation (Mueller and Renken,
2017).
Engage managers and employees
The human capital of organizations undergoing digital transformation plays an important role in the
process and outcome of the transformation in several ways. First, if a CDO is appointed to the
organization, this role is dependent on building and achieving sufficient influence in the organization
to pursue the intended transformation activities and achieve responses (Horlacher, Klarner, and Hess,
2016). Second, employees working on processes affected by digital transformation need to engage in
the changes in order for the transformation to reach its full potential. In the case of implementing
electronic healthcare record (EHR) systems in a hospital, it was found that employees who continued
and maintained their traditional work practices even after the EHR implementation contributed to
limited organizational transformation (Mihailescu and Mihailescu, 2017; Mihailescu, Mihailescu, and
Schultze, 2015). Third, for employees to embrace the digital transformation and engage in adopting
new technologies in their respective fields, it is important that managers consider employees’ concerns
and include employees as active parts of the transformation (Mueller and Renken, 2017; Petrikina et
al., 2017), for instance, by informing, consulting, involving, or collaborating with these internal
stakeholders. Participating in change processes can reduce employee resistance to the processes and in
turn, enhance goal achievement and organizational commitment (Petrikina et al., 2017). Fourth,
research points out the importance of attracting, hiring, and keeping people with new talent and the
ability to integrate digital technology expertise with business know-how (Piccinini et al., 2015)
Grow IS capabilities
Other internal capabilities are also found to enable digital transformation, such as IS capability
(Nwankpa and Roumani, 2016). IS capability is an organization’s ability to assemble and deploy IS-
based resources in combination with other resources, and Nwankpa and Roumani (2016) measured IS
capability as a multi-dimensional variable with three dimensions: IS infrastructure capability, IS
business spanning capability, and IS proactive stance. The authors found that IS capability positively
influences digital transformation. They further suggested that firms with superior IS capabilities are
better able to create digital transformation by redesigning and rethinking existing business processes,
and by transforming traditional offerings into digital offerings (Nwankpa and Roumani, 2016).
Develop dynamic capabilities
Digital technology and innovations can lead to the disruption of organizations and entire industries.
Digital disruption describes the groundbreaking impact of digital innovations, as opposed to sustaining
and incremental changes, and highlights the urgent need to take responsive action (Berghaus and
Back, 2017). Karimi and Walter (2015) studied digital disruption in the newspaper industry and found
that to respond to such disruptions, organizations need to develop dynamic capabilities. Dynamic
capabilities allow a firm to identify and respond to opportunities by transforming the organization,
reconfiguring resources, and building digital platform capabilities, and thus, respond to industry
changes and digital disruptions (Karimi and Walter, 2015; Leischnig, Wölfl, Ivens, and Hein, 2017).
Karimi and Walter (2015) pointed out that digital platform capabilities are essential in responding to
the disruptive changes in the newspaper industry, whereas Leischnig et al. (2017) emphasized the
importance of market intelligence capability in order to sense environmental changes, identify
opportunities and threats, and respond to them accordingly.

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Develop a digital business strategy, and align business and IS

To accomplish a digital transformation, the organization must align the changes with its strategies.
Several organizations have acknowledged the need for a fusion of the IS strategy and the business
strategy into what is referred to as a digital business strategy. A digital business strategy is an
“organizational strategy formulated and executed by leveraging digital resources to create differential
value” (Bharadwaj et al., 2013, p. 472). A digital business strategy can support an organization in
transforming and achieving the intended objectives of digital transformation, by emphasizing digital
leadership abilities, agile and scalable digital operations, digitally enabled customer experiences, and
emerging digital innovations (Leischnig et al., 2017). At the same time, to be able to reach the
objectives of a digital business strategy, a digital transformation is necessary (Nwankpa and Roumani,
2016). However, Yeow, Soh, and Hansen (2017) found that as an organization shifts toward a digital
business strategy, misalignments between the emergent strategy and resources can give rise to internal
tensions. As organizations embark on new strategic directions, it is essential to develop resource
configurations better aligned to the new digital business strategy (Yeow et al., 2017). By studying the
strategic alignment gaps within German banks, Schmidt et al. (2017) found that banks’ digital business
strategies are often well aligned with customer needs, but that digital business strategies and customer
needs are weakly aligned with the internal organization and the IS. This finding indicates that internal
processes and IS systems in the banks studied were not prepared to meet the demands of strategic and
customer perspectives, which has an inhibiting effect on the organizations’ digital agenda (Schmidt et
al., 2017). To reduce alignment gaps and respond to tensions and changes in the environment,
organizations should actively pursue appropriate aligning actions (i.e., sense, transform, and seize) to
reconfigure organizational resources and redefine the strategy (Yeow et al., 2017).

3.3 Implications: what does digital transformation imply for an

organization?
With the drivers and objectives of a digital transformation, and the available resources and tools to
undergo such an organizational transformation, organizations face different implications as effects of
the transformation. Digital transformation entails much more than incrementing the business with
digital technologies; it requires rethinking and restructuring the entire business logics of an
organization (Piccinini et al., 2015). An interviewee in Yeow et al.’s (2017) study stated, “Digital is
not only a technical thing. It is certainly a transformational and organizational thing” (p. 9).
Researchers have studied the effects of digital transformation in organizations and found that such
transformations may lead to organizational changes (Hylving and Schultze, 2013; Isaksson and
Hylving, 2017) and new business models (Mocker and Fonstad, 2017; Remane et al., 2016) and may
also have effects on specific outcomes and performance measures (Nwankpa and Roumani, 2016).
Reformed IS organization
Bilgeri et al. (2017) looked into how digital transformation and integration of the physical and digital
world affects large manufacturing companies’ organizational structures. Based on a multiple-case
study of large manufacturing companies, the authors identified specific organizational issues related to
digital transformation, all of which are reflected in the uncertainty of where and how to allocate and
align digital capability within organizational structures (Bilgeri et al., 2017), and several of which
were also found in other empirical studies in this review. One organizational issue addressed a new
executive role for managing digital activities; digital transformation has led many firms to implement
a CDO role to oversee the establishment of digital capabilities in the organization (Haffke et al.,
2016). However, in large manufacturing companies, how to design this role and where to position this
function within existing organizational structures often remain unclear (Bilgeri et al., 2017). Further,
characteristics such as company size, digitalization experience, degree of fragmentation, company
culture, and the level of cross-functional collaboration were found to affect the need for a CDO to
orchestrate changes that digital transformation brings about (Haffke et al., 2016).

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With digital transformation, IS is becoming increasingly intertwined with business (Haffke et al.,
2016). As a result, tighter alignment between the CDO (business side) and the chief information
officer (CIO) is important, which requires a mutual understanding of each other’s roles and
responsibilities. Further, it was found that introducing a CDO has implications for the CIO role in the
organization (Haffke et al., 2016). One common implication is the CDO becomes an ambassador for
the IS function, with close relations to the business, and thus, enhances the CIO’s role and activities
within the rest of the organization (Haffke et al., 2016). Another common implication was the CDO
takes over some of the CIO’s former responsibilities, which could lead to tension between the CIO and
the CDO, as well as relief from the CIO’s perspective (Haffke et al., 2016), who now can focus on
delivering on a more confined area. Further, even without a CDO digital transformation is still found
to imply changes in the CIO role, in that the CIO tends to take on some of the typical CDO
responsibilities, such as highlighting opportunities and threats of digitalization, increasing business
executives’ digital literacy, orchestrating internal digital initiatives, and setting up digital innovation
units (Haffke et al., 2016).
With digital transformation, the role of the IS function in the organization tends to become
increasingly strategic, and the traditional expectations of the IS function are challenged. As IS is
becoming a more integral part of the organization with new leadership roles and changes in
responsibilities and cultures, organizations often need to redesign the relationship between the IS and
the business (Piccinini et al., 2015). In examining the effects of digital transformation on large
manufacturing companies, Bilgeri and colleagues (2017) found the role and organization of the IS
function is a major organizational issue. Digitally transformed organizations need to manage
traditional IS activities in combination with new digital activities. Consequently, many organizations
explore and embrace a bimodal approach to IS (Haffke et al., 2017), which takes into account a
balance between stability (to accommodate the long lifecycles of traditional IS activities) and agility
(to accommodate short lifecycles of digital activities and technology innovation; Piccinini et al.,
2015). Bimodal IT is based on the idea that traditional IS function design is not well suited to balance
exploratory and exploitive tasks, and that the IS function instead should operate in two parallel modes:
One mode represents the traditional approach to IT governance, and the other mode emphasizes agility
and speed (Haffke et al., 2017). However, in many organizations, there is rivalry between the
traditional IS function and new digital IS entities and teams (Bilgeri et al., 2017).
Haffke, Kalgovas, and Benlian (2017) found that organizing for bimodal IT can take different
approaches: bimodal IT on a project basis, structural subdivisions of IS into two modes, or
implementing the second mode as a separate organizational division from the first mode. They also
found that bimodal IT often is a temporary transition stage and is executed during the phase of a larger
transformational process undergone in the IS function as the organization demands more effective and
agile support from IS in developing digital business solutions (Haffke et al., 2017). However, a
transformation of the IS function eventually enables IS to support the business more effectively in its
digital transformation (Haffke et al., 2017).
New business models
In a study of an automotive organization undergoing a digital transformation, Mocker and Fonstad
(2017) found that the case organization was developing a new business model as a result of their
digital transformation. The organization shifted from being a traditional car manufacturer to becoming
a developer of digitally connected car products and a provider of mobility services (Mocker and
Fonstad, 2017).
Transformations of business models as responses to digital transformation in industries are particularly
common for automotive organizations, which operate in an Industrial Age industry influenced by new
digital technologies (Remane et al., 2016). Incumbent automotive companies are increasingly
introducing new business models in order to compete in the mobility sector. Remane et al. (2016)
conducted a longitudinal study of the development of start-up business models in the mobility sector
and found that the type of business models changed considerably from 2006 to 2015, enabled by

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advances in digital technology. Further, Hildebrandt and colleagues (2015) found that changes in
business models of automotive organizations, in particular, automotive manufacturers, may come from
acquiring digital technology firms and thus, enhancing knowledge of digital technology. Acquiring
such complementary and heterogeneous knowledge of digital technology, and being able to integrate
and commercialize this knowledge, better prepares these organizations for digital transformation
(Hildebrandt et al., 2015).
Although in this review most of the evidence for new business models as a result of digital
transformation was found in the automotive industry, we expect similar effects in other industries.
When studying digital transformation, many researchers have looked to the automotive industry, in
that it is particularly relevant as physical products in this industry are increasingly permeated with
digital layers (Remane et al., 2016), and new digital competitors are increasingly penetrating the
industry, driving incumbent organizations to digitally transform and introduce new business models to
stay competitive. However, other industries are also increasingly experiencing this type of influence
by new digital technologies. Industries such as media, retail, and logistics have experienced the
emergence of new business models (Remane et al., 2016). The financial sector is another example
(Remane et al., 2016), where increased use of digital technology, new types of competitors, and
regulatory changes have now led many banks to consider themselves digital companies rather than
traditional banks. Another example is the healthcare sector, where digital technology is increasingly
changing tools, work processes, and patient care practices (Thorseng and Grisot, 2017), which may
lead to some organizations finding themselves delivering a different type of service than first
anticipated.
Effects on outcome and performance
Digital transformation may also have direct or indirect effects on firm outcomes and different
performance measures. For instance, through collecting data from U.S. CIOs, Nwankpa and Roumani
(2016) found that digital transformation positively influences firm performance (measured by
profitability, customer retention, return on investment (ROI), and sales growth, compared to direct
competitors) and organizations’ degree of innovation. Drawing on previous research, Nwankpa and
Roumani (2016) suggested that as digital transformation in an organization evolves, the organization is
able to achieve increased customization and customer satisfaction, and reduced selling costs. Digitally
embedded business processes increase performance benefits from IS capabilities, and digital
integration with other parties can reduce costs through communication, transparency, and monitoring
(Nwankpa and Roumani, 2016). The authord found that organizations that have undergone a digital
transformation matured and are better able to leverage digital technology to improve firm
performance.
Further, drawing on previous research, the authors suggested that organizations that have embraced
digital transformation are better able to take advantage of new digital technology, nurture digital
strategies leading to process improvement and modularization, and are able to introduce new practices
and innovative initiatives in their organizations (Nwankpa and Roumani, 2016). Thus, the authors
found that organizations that integrate and build on digital technologies to drive change and new
business processes and shift business operations are also more innovative as organizations.

4 Discussion and Conclusion

In this study, we systematically reviewed empirical research articles on digital transformation. We
analyzed the contributions with respect to research topics, their findings, and our research questions.
This literature review contributes to the literature in two ways and to practice.
First, this review provides a systematic overview of the prevailing research in this area. We identified
21 significant empirical contributions that studied drivers and objectives, success factors, or
implications of digital transformation. The small number of contributions in this field is in line with
Nwankpa and Roumani’s (2016) observation that empirical evidence for the role of digital

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Osmundsen et al. / Digital Transformation

transformation is lacking, as limited antecedents and consequences of digital transformation have been
identified in theoretical frameworks. Digital transformation is a novel concept; 91% of the identified
articles were published between 2015 and 2017 (55% in 2017). Among the articles examined in this
review, we identified 17 theoretical approaches. The variety of theories employed in the studies
reflects that the concept may be too broad to be examined within a single theory or framework
(Fichman et al., 2014), and that the IS discipline is still far away from having a consistent body of
theory to explain important concepts related to digital transformation (Ciriello and Richter, 2015).
Second, based on a thorough analysis of empirical findings we provide an overview of (1) why
organizations undergo digital transformation, (2) how an organization can accomplish digital
transformation, and (3) how digital transformation affects an organization. The findings presented in
this paper are limited to empirical studies, which mainly consist of single-case studies (approximately
40% of the articles are single-case studies) within a limited selection of industries. Research on digital
transformation would benefit from including other, and comparative, case studies from a larger
spectrum of organizations and industries.
This study also contributes to practice, and managers would benefit from this review. The analysis and
discussions of different empirical findings shed light on the success factors and implications of digital
transformation, which many organizations face today or are likely to face in the near future. The
importance of a supportive and agile organizational culture, well-managed activities, engaged
managers and employees, and leveraged external and internal knowledge is emphasized in this review.
In addition, we highlight the need to grow and develop IS capabilities and dynamic capabilities, align
business and IS, as well as develop a digital business strategy. An overview of the underlying reasons
for organizations undergoing digital transformation, what it takes to accomplish digital transformation,
and the implications such transformations may have for organizations, is helpful for managers in
understanding what may lie ahead of them and help them prepare for and structure their own approach
to digital transformation.
However, we were surprised not to find more emphasis on change management in relation to the
digital transformations studied in the reviewed articles. Relevant themes such as conflicts,
discrepancies, uncertainty, and power struggles, are issues we would expect to arise to some extent
with digital transformation. Moreover, insight into both positive and negative consequences of digital
transformation, specifically effects on employees and management, is important for both research and
practice. Future research on digital transformation could benefit from including such a perspective.
Additionally, we find it peculiar that the role of IT governance is barely discussed in relation to digital
transformation in the reviewed articles. IT governance has traditionally has been portrayed as an
important factor for organizations succeeding with IT investments, and IT governance performance
has been found to correlate with other desired measures of success, such as profits, asset utilization,
and growth (Weill and Ross, 2005). However, it does not come across as an important success factor
in the digital transformations studied in the reviewed articles. Research on the role of IT governance in
relation to digital transformation could provide valuable insights to the IS field, and to practitioners.
We based this literature review on literature sources within the IS field, top-rated information
management journals, and international conferences on information systems. Admittedly, 21 empirical
articles from this very prominent research area may seem like a small sample. The research could
benefit from extending the review to include sources such as practitioner-scientific outlets and journals
and conferences within other research fields. The research could be further extended by selecting other
keywords, using other inclusion and exclusion criteria, and choosing a broader time frame.

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Appendix A
Article
Source Title Year Author(s)
ID
Journal of
The role of dynamic capabilities in
Management Karimi, J. and Walter,
1 responding to digital disruption: A factor- 2015
Information Z.
based study of the newspaper industry
Systems
Journal of
Strategic Aligning with new digital strategy: A Yeow, A., Soh, C. and
2 2017
Information dynamic capabilities approach Hansen, R.
Systems
The role of the CIO and the CDO in an Haffke, I. Kalgovas, B.
3 ICIS 2016
organization’s digital transformation J. and Benlian, A.
Crossing boundaries: Organization design
Horlacher, A., Klarner,
4 AMCIS parameters surrounding CDOs and their 2016
P. and Hess, T.
digital transformation activities
Transforming industrial business: The Piccinini, E., Hanelt,
5 ICIS impact of digital transformation on 2015 A., Gregory, R. and
automotive organizations Kolbe, L.
Evolving the modular layered architecture
Hylving, L. and
6 ICIS in digital innovation: The case of the car’s 2013
Schultze, U.
instrument cluster
IT capability and digital transformation: A Nwankpa, J. K. and
7 ICIS 2016
firm performance perspective Roumani, Y.
Digitalization of the banking industry: A
Schmidt, J., Drews, P.
8 AMCIS multiple stakeholder analysis on strategic 2017
and Schirmer, I.
alignment
The role of cultural values for digital
9 AMCIS transformation: Insights from a Delphi 2017 Hartl, E. and Hess, T.
study
Mihailescu, M.,
The generative mechanisms of healthcare
10 ICIS 2015 Mihailescu, D. and
digitalization
Schultze, U.
Entering the digital era – The impact of
Hildebrandt, B., Hanelt,
digital technology-related M&As on
11 ICIS 2015 A., Firk, S. and Kolbe,
business model innovations of automobile
L.
OEMs
Changes in digital business model types – Remane, G., Hanelt, A.,
12 AMCIS A longitudinal study of technology 2016 Hildebrandt, B. and
startups from the mobility sector Kolbe, L.
Improving the readiness for change – Petrikina, J., Krieger,
Addressing information concerns of M., Schirmer, I.,
13 AMCIS 2017
internal stakeholders in the smartPORT Stoeckler, N., Saxe, S.
Hamburg and Baldauf, U.
The transformative role of bimodal IT in Haffke, I., Kalgovas, B.
14 HICSS 2017
an era of digital business and Benlian, A.
The effect of anarchistic actions in digital
Isaksson, V. and
15 HICSS product innovation networks: The case of 2017
Hylving, L.
“over the air” software updates

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Osmundsen et al. / Digital Transformation

From digital business strategy to market Leischnig, A., Wölfl,

16 ICIS performance: Insights into key concepts 2017 S., Ivens, B. S. and
and processes Hein, D.
Helping employees to be digital Mueller, B. and
17 ICIS 2017
transformers – The Olympus.connect case Renken, U.
Disentangling the fuzzy front end of digital Berghaus, S. and Back,
18 ICIS 2017
transformation: Activities and approaches A.
How digital transformation affects large Bilgeri, D., Wortmann,
19 ICIS 2017
manufacturing companies’ organization F. and Fleisch, E.
Mocker, M. and
20 ICIS Driving digitization at Audi 2017
Fonstad, N. O.
Understanding healthcare digitalization: A Mihailescu, M. and
21 ICIS 2017
critical realist approach Mihailescu, D.

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